TMI Blog2009 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... gh it has been categorically held by the Assessing Officer in the assessment order that activity carried on by assessee tantamounts to cutting and not manufacturing or production." [B] "Whether on the facts and circumstances of the case and in law was the Appellate Tribunal right in holding that assessee is engaged in manufacturing article or thing and is entitled to deduction u/s. 80IB of the Income-Tax Act, 1961 though assessee failed to fulfill the condition laid down u/s. 80IB(2)(iii) of the Act?" [C] "Whether on the facts and circumstances of the case and in law was the Appellate Tribunal right in holding that assessee is engaged in manufacturing article or thing when one of the member dissented and decision is taken on the basis of opinion of majority?" 2. The Assessment Year in question is 2001-2002. Though, this appeal has not been admitted, at the request of learned counsel for the contesting parties this appeal has been heard along with group of Tax Appeals, being Tax Appeal No. 532 of 2008 and cognate matters, as according to learned counsel for appellant revenue, the issue involved is identical in terms. 3. The matters have therefore been heard at length. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o existence, and the end use of the produced article is not a relevant test for the purpose of determining whether the activity amounts to manufacture or not. In support of the submissions, learned counsel has placed reliance on number of judgments of the Apex Court as well as various High Courts. 8 . On the other hand, learned counsel for the respondent assessee submitted that in fact no substantial question of law arose and the difference of opinion amongst the members, who constituted the Bench originally, was only on the question as to whether on facts, the activity of the assessee amounted to manufacture of an article or a thing or not. The learned counsel also placed reliance on various decisions of the Apex Court and this High Court to point out that the tests formulated by the said decisions have been applied by the Tribunal while recording the majority opinion. 9. There is no dispute on facts, in as much as it is an accepted position between the parties that the assessee Company is engaged in making CRGO Core Lamination or Transformer Core, a vital component of various kinds and types of transformers used in power distribution. As already noted, the Core Lamination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the limbs or plates are prepared, however every single and individual plate is yet to be further processed to restore or improve its quality characteristics. V- ANNEALING : The fifth and one of the most important step of the process is the annealing process. This process is undertaken to de-burr and relieve the stress and strains on the limbs / plates through a roller hearth annealing furnace, CRGO electrical steel and core laminations develop stress, strains and burrs during shipment transit and processing which affects its quality. Annealing process is down as per the mill's specification at a temperature of 820' for 72 to 90 seconds depending upon the thickness and grade of material. This process of annealing is to restore and improve the magnetic and electrical properties of lamination. VI- TESTING OF LAMINATION : After annealing, the laminations are physically inspected for technical details. They are verified to ensure that they are as per customer's drawings and specifications. Key aspects like length, width, thickness, mitering, holing, notching and physical appearances are verified and examined during this process. The verification is done by experienced and skil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurely wrapped with jute cloth and plastic covers. The core is then strapped tightly to the skids/pallets with steel straps. For packing stacked core laminations, individual limbs/ laminations are packed separately with jute cloth and plastic wrappers, further they are strapped tightly onto wooden skids/pallets. Strapping the final product onto wooden skids ensures and prevents any damaged or disturbance to the material during transportation. Packing lists provided to customers. The Packaging department follows the Pyramid style of packing the laminations which is advantageous during core assembly. 10. Admittedly, the majority opinion has recorded that the aforesaid activities in cases of some assessees are without the process of annealing but the said fact by itself does not make any difference. The majority opinion, as expressed by the Third Member, in his order, reads as under: ".... Looking to these facts, there cannot be two opinions that the shape of lamination has undergone a complete change after performing various processes. I also find that there was no dispute that the raw material from which the core is made is called CRGO coils whereas the item which has emerged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further referred to various opinions of different experts on the subject and recorded that such technical opinions should be considered on merits, and though not sacrosanct, either the same should be accepted or rejected on merits, but cannot be ignored. That the experts have opined that various activities performed by the assessee for making the transformer core amount to manufacturing activities and nothing was pointed out to take a different view, i.e. different from the view expressed by the experts. 12. In light of the aforesaid findings of facts recorded by majority of the members of the Tribunal, the Court is of the opinion that it cannot be said that any substantial question of law is involved. Whether a particular activity amounts to manufacture or not would always be a question dependent upon the facts and evidence on record and would be based on the facts of each case. The only issue which would call for an inquiry is as to whether correct tests have been applied after finding the facts on record. The tests to ascertain whether an activity amounts to manufacture or production of an article or thing have been laid down and reiterated by various decisions of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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